Chinese bitcoin exchanges says to strengthen scrutiny of customers

SHANGHAI China’s three largest bitcoin exchanges said on Thursday they will strengthen oversight of customers’ identities and sources of funds, in the latest shift since the Chinese central bank stepped up its scrutiny of the industry.

BTCC, OkCoin and Huobi said in identical statements on their websites that they wanted to curb market speculation and prevent activities such as currency exchange through bitcoin, which they warned was not issued by monetary authorities and carried high risk.

Their move comes after China’s central bank said it called nine of the country’s smaller bitcoin exchanges in to a Wednesday meeting to discuss risks in the bitcoin market, and warned them that they risk closure if they seriously violated regulations or took part in activities such as margin lending.

Beijing signaled that it was keeping a closer eye on the bitcoin industry last month by launching checks into BTCC, Huobi and OkCoin, amid growing government efforts to stem capital outflows and relieve pressure on China’s currency, the yuan.

While the yuan weakened 6.6 percent against the dollar last year, its worst performance since 1994, the bitcoin price has soared to near-record highs.]

That, and the relative anonymity the digital currency offers, has prompted some to believe bitcoin has become an attractive option for tech-savvy Chinese to hedge against the yuan and skirt rules limiting how much foreign exchange individuals can buy each year.

BTCC, Huobi and OkCoin last month stopped margin lending and introduced trading fees after the PBOC launched checks into them.

In their Thursday statements, they also said they may freeze assets or limit trading by users who were found to flout the rules. Their statements also contained links to documents published by China’s banking regulator that warned investors about market risks.

News of meetings between the various exchanges and the PBOC and other government agencies has caused the bitcoin price to swing wildly. On Wednesday, the price fell from a one-month high after sources at bitcoin exchanges in China said the PBOC had summoned some exchanges to a closed-door meeting.

The price of bitcoin fell 1.23 percent on the Huobi exchange on Thursday from the previous day, trading at 7,458 yuan, equivalent to around $1,086.

The PBOC said the nine exchanges involved in the Wednesday meeting were CHBTC, BtcTrade, HaoBTC, Yunbi, Yuanbao, BTC100, Jubi, BitBays and Dahonghuo. Industry insiders said the majority of these exchanges allowed other cryptocurrencies to be traded on their platforms besides bitcoin.

BtcTrade, Bitbays and BTC100 declined to comment on the meeting. Reuters was unable to immediately reach the other six platforms for comment.

(Reporting by Brenda Goh; Additional Reporting by John Ruwitch and SHANGHAI Newsroom; Editing by Sam Holmes and Adrian Croft)